Pricing intangible risks is tricky for even the best credit analysts

The opening up of China’s financial markets is gathering pace—a bond trading link between the mainland and Hong Kong launched Monday, which should make it easier for foreign investors to access the country’s $8.5 trillion bond market. Pockets of opportunity exist there, but only for those with their eyes wide open.

China’s bond market is already the world’s third largest, but there is much scope for it to grow. At current levels, it is only equivalent to around three-quarters of the country’s GDP: by contrast, the U.S. bond...